Holding

The auction was illegal and void ab initio; a decree‑holder may not bid or purchase property without express court permission, and the executing court must limit the sale to the portion necessary to satisfy the decree.

Summary

The appellant had entered into a contract to sell a parcel of land to the respondent, who later sued for specific performance but the suit was dismissed and a decree for refund of earnest money was granted. The decree-holder sought execution of the decree, leading the court to attach and auction the appellant's land. The respondent participated in the auction and purchased the land for Rs 12,000 without obtaining the express permission required under Order XXI Rule 72 of the CPC, and the auction was conducted without proper notice or compliance with Rules 66 and 67. The Supreme Court held that the sale violated mandatory procedural requirements, that a decree‑holder cannot bid without court permission, and that the executing court must sell only that portion of property necessary to satisfy the decree. Consequently, the sale was declared illegal and void, the appeal was allowed, and the appellant was ordered to pay the decretal amount, interest, execution costs and an impounding fee.

Issues considered

Whether the auction of the appellant's land was conducted in accordance with the mandatory procedural requirements of Order XXI Rules 66, 67 and related provisions of the CPC.
Whether the decree‑holder (respondent) was entitled to bid for and purchase the property without prior permission of the court under Order XXI Rule 72.

Legislation cited

Code of Civil Procedure, 1908s. Order XXI Rule 64, s. Order XXI Rule 66, s. Order XXI Rule 67, s. Order XXI Rule 72, s. Order XXI Rule 90, s. Section 47, s. Section 73

Subjects

auction saledecree‑holderCPC Order XXInotice and publicityexecution of decreeillegal saleover‑reachingspecific performance

Judgment

A LAL CHAND
v.
VIIITH ADDL. DISTRICT JUDGE AND ORS.

FEBRUARY 21, 1997
-
B
[K. RAMASWAMY ANDS. SAGHIR AHMAD, JJ.]

Code of Civil Procedure, 1908 :

Or. XX/, Rules, 72 & 9o-Execution of decree-Auction sale-Decree-
C holder taking part in auction without pennission of Court-Held, decree-
holder has no right to bid in the auction without obtaining prior pennission
of the Court.

Or. XXI, Rules 66, 67 and 9o-Execution of decree-Auction
D sale-Conducted without proper notice and publicity-Held, procedure
adopted caused great prejudice to the interest of judgment-debtor. -
Desh Bandhu Gupta v. N.L. Anand & Rajinder Singh, (1994] 1 SCC.
131, relied Oil.

E Or, XXI. Rules 64 and 90-Execution of decree arising out of an
agreement of sale of 43 decimal of land and decretal amount being Rs.
10,00(}-Land admeasuring 1 acre 52 decimals put to auction-Land pur-
chased by decree holder, without pennission of court, for Rs. 12,000 Held, the
decree-holder had over-reached his original agreement which he failed in the
F suit itself by participating and getting sale in his favour. There is no attempt
made for sale of a reasonable portion of the property for realisation of the
decree debt-Sale of property conducted by executing court is clearly il-
legal-However the appellant would pay the decretal amount, interest on
principal earnest amount @ 12% per annum as well as impounding fee @ --
G 5% on sale amount of Rs. 12,000.

Desh Bandhu Gupta v. N.L. Anand & Rajinder Singh, [1994] 1 SCC
131; Ambati Narasayya v. M. Subba Rao, (1989) Supp. 2 693 and Takaseela
Pedda Subba Reddy, v. Pujari Padmavathamnta, [1977] 3 SCC 337, relied
-
H on.
346
LAL CHAND v. VIIITII ADDL. DISTI. JUDGE 347

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1727 of A
1997.

- From the Judgment and Order dated 9.11.95 of the Allahabad High
Court in W.P. No. 2680 of 1989.

Pramod Swarup, T.N. Singh and B.M. Sharma for the Appellant. B
M.S. Ganesh, Sunil Kr. Singh and Anil Shrivastav for the Respon-
dents.

The following Order of the Court was delivered :
c
Leave granted. We have heard learned counsel on both sides.

This appeal by special leave arises· from the judgment of the High
Court of Allahabad, made on November 9, 1995 in Civil Miscellaneous
Writ Petition No. 2680/89.

- The admitted position is that the plaintiff-respondent had entered
into an agreement with the appellant to purchase 43 decimals of land in
plot No. 389/2 situated in Umraha, District Varanasi for a sum of Rs. 6625.
D

A sum of Rs. 2,000 was paid as earnest amount while the balance amount
had already been paid in the form of loan. The respondent filed the suit E
seeking specific performance of the agreement, which relief ultimately was
refused; but a decree for refund of the earnest money was granted. Since
the amount was not paid, the respondent had brought the properties of the
appellant, to the extent of one acre, 52-1/2 decimals to sale. The same came
to be questioned by filing of an objection under Order XXI, Rule 90, CPC
which was dismissed by the court below and upheld by the High Court. F
Thus, this appeal by special leave.

Two questions have arisen in this case, namely, whether the auction
was properly conducted by the executing court and whether the respon-
dent -decree holder was entitled to participate in the auction to bid and
had sale confirmed in that behalf. It is not in dispute that the land, viz., G
plot Nos. 24 and 25 of admeasuring 1 acre 19-1/2 decimals and plot No.
50-A admeasuring 33 decimals totalling 1 acre 52-1/2 decimals was brought
to sale to realise the decretal amount of Rs. 10,921-50. The court fixed the
valuation at Rs. 11,000. On a sale conducted by Amin of the court, the bid
was knocked down on April 30, 1983 in favour of the respondent-decree H
348 . SUPREME COURT REPORTS [1997] 2 S.C.R

A holder for a sum of Rs. 12,000. As stated earlier, the question has arisen
whether the sale conducted in execution of the decree is valid in law?
Order XXI, Rule 72, CPC envisage as under :

"72. Decree-holder not to bid for or buy property without pennission
....
- (1) No. holder of a decree in execution of which Property is sold
B shall, without the express permission of the court, bid for or
purchase the property.

Where decree-holder purchases,· amount of decree may be taken
as payment -- (2) Where a decree-holder purchases with such
permission, the purchase-money and the amount due on the decree
c may, subject to the provisions of Section 73, be set off against one
another, and the Court executing the decree shall enter up satis-
faction of the decree in whole or in part accordingly.

(3) Whether a decree-holder purchases, by himself or through
D another person, without such permission, the Court may, if it thinks ·
fit, on the application of the judgment-debtor or any other person
whose interests are affected by the sale, by order set aside the sale;
and the costs of price which may happen on the re-sale and all
expenses attending it, shall be paid by the decree-holder."
-
E A reading thereof clearly indicates that no holder of a decree execu-
tion of whic4 property is sold shall, without the express permission of the
Court, bid for or purchase the property. In the event of such a purchase,
on an application by the judgment-debtor or any other person whose
interests are affected by such a sale, set aside such a sale. In paragraph 13
F of the petition, the appellant has stated, among others, thus :

"After the said auction sale the judgment-debtor filed an objection
under Order XXI. Rule 90, CPC mainly on the following grounds
in the Court of Munsif Havali, Varanasi :

(i) The decree-holder purchased the said land through auction
G
without the permission of the Court;"

In the counter-affidavit filed by the respondent, he has not specifi-
cally denied in that behalf except stating that it is a matter of record. The
proceedings of the auction do indicate that if he was really the person
H permitted to participate in the bid, one would necessarily expect an active
LAL CHAND v. VIIITH ADDL. DISTI. JUDGE 349

participation in the auction. But the proceedings do show that &fter one A
Bali Ram Prasad, had bid, earlier, for Rs. 10,000 but later offered Rs.
11,500 and one Srinath had offered a sum of Rs. 11,000, as a last bid, the
respondent offered Rs. 12,000 so as to be within the outer limit of valuation
fixed by the Court to ward off further onslaught on court sale. Since there
was no further offer made by anybody thereafter out of the five participants B
in the bid, the bid was knocked down in favour of the decree-holder-
respondent. Under the teeth of the mandatory language of Order XXI,
Rule 72, CPC, he has no right to bid in the auction without obtaining prior
permission of the Court. As a consequence, the sale conducted was clearly
in flagrant violation of Order XXI, Rule 72, CPC.
c
It is also to be seen that the sale was conducted without there being
any proper notice and publicity as is evident from the report submitted by
the Court Amin. After the bid was started, sale was notified in the viUage
by ·beat of drum and thereafter people started coming and five persons
including the respondent participated in the bid. This part of the procedure D
adopted is clearly illegal anti caused great prejudice to the interest of the
appellant. In Desh Bandhu Gupta v. N.L. Anand & Rajinder Singh, (1994]
1 SCC 131, this Court had pointed out the mandatory requirements of the
procedure, as indicated therein, thus :

"The contentions of S/Shri Madhava Reddy and Gujral that the E
appellant had not given his valuation and that, therefore, is not
open to him to raise the objections after the sale is unacceptable.
Since the court had not given any notice to the appellant which is
mandatory, the need to submit his valuation did not arise. Order
21 Rule 54, sub-rule (I-A) brought in by 1976 Amendment Act p
mandates that the Court should require the judgment-debtor to
attend the court on a specified date to take notice of the date to
be fixed for settling the terms of the proclamation of sale. Form
24 of Appendix 'E' second para and the court Rules also envisage
the mandate. It is a reminder to the court that it has a statutory
duty to issue notice to the judgment-debtor before settlement of G
the terms of proclamation of sale. Then only the proviso to Rule
66(2) comes into play dispensing with multiplicity of notice and
not dispensation of mandatory compliance of notice to the judg-
ment-debtor. Had it been a case where notice was served and the
appellant lay by, without. objecting to the valuation given by the H
350 SUPREME COURT REPORTS [1997] 2 S.C.R.

A decree-holder, certainly that would be put against the appellant to
impugn the irregularities after the sale or the under-valuation
settled by the court in the proclamation of sale. The further
contentions of both the counsel that merely because there is no
order under Order 21 Rule 66(2), it cannot be construed that the
Execution Court had not applied its mind in settling the terms of
B
the proclamation of sale, is on of desperation. Except giving a
schedule of dates for conducting the sale the Execution Court
totally abdicated it duty to scrupulously comply with the mandatory
procedure and did not apply its mind to the mandatory duty cast
on it by Order 21 Rule 66 to settle the terms of proclamation of
c sale, and proper publication under Rule 67. After April 20, 1979,
the court had merely ensured its publication on the court notice
board and on the site at the respective dates and no further. This
Court in Shalimar Cinema v. Bhasin Film Corpn., [1987] 4 SCC
717 held that the court has a duty to see that the requirements of
Order 21 Rule 66 are properly complied with. It is incumbent on
D
the court to be scrupulous in the extreme. No action of the court
or its officer should be such as to give rise to the criticism that it
was done in a causal way. Therefore, a proclamation of sale drawn
casually without compliance of the mandatory requirement and a
sale held in furtherance thereof is not a sale in the eye of law. We
E are of the considered view that the procedure adopted by the court
in non-compliance of Order 21 Rules 66 and 67 is in flagrant
breach of the mandatory provision. it is a nullity ab initio."

There is yet another infirmity which goes to tlie root of the matter.
F It is seen that the respondent, in fact, had a contract to purchase 43
decimals of land and in the execution, managed to give the list of all other
lands totalling ,1 acre 52-1/2 decimals and the decree for Rs. 10,000 and
odd was sought to be put to execution, and purchased the land for 12,000.
In other words, he had over-reached his original agreement which he failed
in the suit itself by participating and getting sale in his favour. There is no
G attempt made for sale of a reasonable portion of the property for realisa-
tion of the decree debt. Order XXI Rule 64 expressly mandates as under:

"64. Power to order property attached to be sold and proceeds to
be paid to person entitled. Any court executing a decree may order
H that anf property attached by it and liable to sale, or such portion
LAL CHAND v. VIIITH ADDL. DISTI. JUDGE 351

thereof as may seem necessary to satisfy the decree, shall be sold, A
and that the proceeds of such sale, or a sufficient portion thereof,
shall be paid to the party entitled under the decree to receive the
same."

· This part of the case was also considered in Desh Bandhu Gupta's
case (supra) thus : B

- "Yet another contention of Mr. Gupta is that the sale of the plot
of 550 sq. yards is in excess of the execution and the order to sell
it is the result of non-application of mind touching the jurisdiction
of the court rendering the sale void or manifestly illegal. Therefore, C
the need to invoke Order 21 Rule 90 does not arise and it can be
set aside under Section 47, CPC.

Proviso to sub-rule (4) of Rule 17 of Order 21 provides the
procedure to receive the application for execution of the decree. D
In the case of a decree for payment of money, the value of the
property attached shall, as nearly as may be, correspond with the
amount due under the decree. Rule 64 of Order 21 charges the
Executing Court that it may order attaching of any property to the
extent that "such portion thereof as may seem necessary to satisfy
the decree would be sold". rt is also enjoined under sub-rule (2)(a) E
.of Rule 66 of Order 21 that where a part of the property would
be sufficient to satisfy the decree, the same be sold by public
auction. Form 27 of Appendix E of the schedule also directs the
court auctioneer to sell so much of the said property as shall realise
the sum in the said decree and costs. The Code, therefore, has p
taken special care charging the duty on the Executing Court and
it has a salutary duty and a legislative mandate to apply its mind
before settling the terms of proclamation and satisfy that if part of
such property as seems necessary to satisfy the decree should be
sold if the sale proceeds or portion thereon is sufficient for pay-
ment to the decree-holder or the person entitled under the decree G
to receive the amount and so much of that property alone should
be ordered to be sold in execution. In Ambati Narasayya v. M.
Subba Rao, [1989] Supp. 2 SCC 693 this Court held that it is the
duty cast upon the court under Order 21 Rule 64 to sell only such
property or a portion thereof as may be necessary to satisfy the H
\
.,__
I

352 SUPREME COURT REPORTS [1997] 2 S.C.R.

A decree. It is a mandate of the legislature which cannot be ignored.
Therein for execution of a decree of a sum of Rs. 2000 and costs,
the appellant's 10 acres land was brought to sale which was
purchased for a sum of Rs. 17,000, subject to discharge of a Court
mortgage of Rs. 2,000. This Court held that without the court's
examining whether a portion of the property could be sold, the
B
sale held was not in conformity with the requirement of Order 21
Rule 64 and it was held to be illegal and without jurisdiction. The
sale was set aside and the court was directed to put the judgment-
debtor in possession of the land and to refund the sale amount to
the auction-purchaser. Further direction was given to execute the
-
c decree in accordance with law. In Mangat Prasad v. Krishna Kumar
Maheshwar, [1992] Supp. (3) SCC 31 a shop was sold to realise a
decree debt of about Rs. 29,000 and the sale price at the auction
was Rs. one lakh and odd_. This Court finding that it is excessive
execution, set aside the sale and directed return of the sale amount
to the auction-purchaser with interest @ 12%. In Takaseela Pedda
D
Su/Jba Reddy v. Pujari Padmavathamma, (1977] 3 SCC 337 to
recover the decree debt in two decrees the properties situated in
two different villages were brought to sale. In the first _instance the
property in 'D' village fetched. a sum of Rs. 16,880, which was
sufficient to satisfy the decretal amount. The property in 'G' villag~
E was also sold which fetched a sum of Rs. 12,000. This Court set
aside the sale of 'G' village. Admittedly, the site in sale is to the
extent of 550 sq. yards, situated in a commercial area around which
the petroleum installations are established. Though, as contended
by Shri Madhava Reddy, that there may be building regulation for
division of the property into portions, but the court made no
F
attempt to sell a portion of· the property, made l;>e 100 yards or
150 yards out of it, .or whether undivided portion thereof would
have satisfied the decree debt. It could be legitimately concluded
that the court did apply its mind at all to this aspect as well."

G InAmbati Narasayya v. M. Subba Rao, [1989] Supp. 2 693 at 695, this
court had pointed out as under :

"It is of importance to note from this provision that in all execution
proceedings, the court has to first decide whether it is necessary
H to bring the entire attached property to sale or such portion thereof
LAL CHAND v. VIIITII ADDL. DISTI. JUDGE 353

a may seem necessary to satisfy the decree. If the property is large A
and the decree to be satisfied is small, the court must bring only
such portion of the property, the proceeds of which would be
sufficient to satisfy the claim of the decree holder, it is immaterial
whether the property is one or several. Even if the property is one,
if a separate portion could be sold without violating any provision B
of law only such portion of the property should be sold. This, in
our opinion, is not just a discretion, but an obligation imposed on

- the court. Care must be taken to put only such portion of the
property to sale the consideration of which is sufficient to meet
the claim in the execution petition.The sale held without examining
this aspect and not in conformity with this requirement would be C
illegal and without jurisdiction."

- Similar view was taken in Takaseela Pedda Subba Reddy v. Pujari
Padmavathamma, [1977] 3 SCC 337 at 340.

Thus, we hold that the sale of the property of the appellant con- D
ducted by the executing court is clearly illegal. However, the appellant's
directed to pay the decreetal amount, interest on the principal earnest
amount of Rs. 3,000 @ 12% per annum from the date of deposit and the
costs of execution as well as impounding fee @ 5% on the sale amount of
Rs .. 12,000.
E
The appeal is accordingly allowed. No. costs.

R.P. Appeal allowed.